PGS Slides as Goldman Warns of Weaker Seismic Demand: Oslo Mover

Jan. 24 (Bloomberg) -- Petroleum Geo-Services ASA, the
third-largest surveyor of underwater oil and gas fields, dropped
the most in a month in Oslo after Goldman Sachs Group said lower
crude prices and rising capacity will lead to weaker day-rates.

Shares of the Lysaker, Norway-based company lost as much as
2.6 percent, the most since Dec. 18, and were down 2.1 percent
at 96.55 kroner as of 1:15 p.m. in the Norwegian capital, making
it the biggest loser on the Bloomberg Europe Energy Index. More
than 1.9 million shares have been traded so far today, compared
with a three-month daily average volume of about 1.7 million.

“Marine contract pricing will be flat in 2014 and is at
risk of falling in 2015, due to lower demand growth coinciding
with new supply,” Michael Rae, an analyst at the investment
bank, said in a note to clients dated yesterday. Large oil
companies “will be more selective around investments, with
discretionary capex such as seismic at risk.”

Oil and gas producers operating in the waters off Africa,
Norway and South America have increased spending on exploration
amid growing energy demand. With established fields maturing and
new resources harder to find and develop, companies including
PGS, TGS Nopec Geophysical Co. and Polarcus Ltd. have bet on
growing demand for the underwater maps they produce.

A decline in oil prices next year will see offshore
exploration plateau and demand for seismic services drop, said
Goldman’s Rae. At the same time, supply of seismic capacity will
increase with new-builds from established companies as well as
new regional entrants, said Rae, who cut his recommendation on
PGS to sell from buy.

Seismic Vessels

PGS, the world’s biggest surveyor after CGGVeritas and
Schlumberger Ltd., has 14 seismic vessels currently in operation
and four more due for delivery during the next two years. Shares
in the company have gained 31 percent during the last 12 months,
giving it a market value of 21 billion kroner ($3.8 billion.)

The surveyor expects to report earnings before interest,
tax, depreciation and amortization of $940 million to $980
million this year, it said on Dec. 18. Ebitda for 2012 will be
less than $800 million, it said. PGS is scheduled to announce
its fourth-quarter results on Feb. 14.